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Currencies steady as Hungary central bank set to pause after 15 rate cuts



<html xmlns="http://www.w3.org/1999/xhtml"><head><title>CEE MARKETS-Currencies steady as Hungary central bank set to pause after 15 rate cuts</title></head><body>

By Boldizsar Gyori

BUDAPEST, Aug 27 (Reuters) -Central European currencies were little changed on Tuesday ahead of a Hungarian central bank rate decision likely delivering the first pause in its policy easing after more than a year.

Hungary's central bank is expected to pause its easing cycle on Tuesday after 15 consecutive rate cuts beginning in May 2023, cautioned by Hungarian headline inflation HUCPIY=ECI rising to an annual 4.1% in July from 3.7% in June, with core inflation HUCPIC=ECI also accelerating.

Headline inflation peaked at 25% in early 2023.

Eleven out of 15 economists surveyed expected the European Union's highest benchmark rate to stay on hold on Aug. 27, keeping its base rate at 6.75%, and four expected a 25 bp cut, a Reuters poll showed.

Hungary's forint EURHUF= traded at 394.5 by 0759 GMT to the euro.

Analysts were weighing a dovish Fed and a weaker-than-expected Hungarian Q2 GDP reading to the central bank's communication which signaled a likely pause at its upcoming meeting.

"Hungary’s inflation data have not been impressive... at the same time, Q2 GDP was a disappointment; and conditions have got more dovish in the more developed countries... It may therefore make sense to implement any remaining rate cuts," Commerzbank said in a note.

"On balance, we lean towards no change. This is because EUR-HUF has returned to near 395.0," it said.

Hungary's central bank is scheduled to announce its decision at 1400 CET (1200 GMT) followed by a statement and press conference from 1500 CET (1300 GMT).

Elsewhere in the region, the crown hung around the psychological 25 per euro level, which it weakened past at the end of June.

Bank CSOB said it was unlikely to make a strong push to firm past the level.

"The reason is the stabilization of the eurodollar combined with worse sentiment in the domestic economy," bank CSOB said, following data on Monday showing consumer confidence was lower for a fourth straight month.

The Polish zloty EURPLN= traded at 4.28, with analysts expecting it to remain there with a slight chance of weakening but remaining in the range of 4.24 - 4.31.



CEE MARKETS

SNAPSHOT

AT 0959 CET






CURRENCIES







Latest

Previous

Daily

Change




trade

close

change

in 2024

EURCZK=

Czech crown

EURCZK=

25.0550

25.0410

-0.06%

-1.41%

EURHUF=

Hungary forint

EURHUF=

394.5000

394.5500

+0.01%

-2.87%

EURPLN=

Polish zloty

EURPLN=

4.2825

4.2835

+0.02%

+1.45%

EURRON=

Romanian leu

EURRON=

4.9762

4.9765

+0.01%

-0.04%

EURRSD=

Serbian dinar

EURRSD=

117.0100

117.0400

+0.03%

+0.20%


Note: daily change

calculated from



1800 CET












Latest

Previous

Daily

Change





close

change

in 2024

.PX

Prague

.PX

1585.40

1585.8100

-0.03%

+12.12%

.BUX

Budapest

.BUX

73092.38

73467.13

-0.51%

+20.57%

.WIG20

Warsaw

.WIG20

2393.94

2395.38

-0.06%

+2.17%

.BETI

Bucharest

.BETI

18400.69

18452.97

-0.28%

+19.71%













Spread

Daily






vs Bund

change in


Czech Republic





spread

CZ2YT=RR

2-year

CZ2YT=RR

3.3680

0.0090

+098bps

+1bps

CZ5YT=RR

5-year

CZ5YT=RR

3.4950

0.0100

+134bps

+1bps

CZ10YT=RR

10-year

CZ10YT=RR

3.7600

0.0180

+151bps

+2bps


Poland






PL2YT=RR

2-year

PL2YT=RR

4.8590

0.0150

+247bps

+2bps

PL5YT=RR

5-year

PL5YT=RR

5.1080

0.0280

+295bps

+3bps

PL10YT=RR

10-year

PL10YT=RR

5.3620

0.0100

+312bps

+1bps










FORWARD RATE AGREEMENTS







3x6

6x9

9x12

3M interbank


Czech Rep

CZKFRAPRIBOR=

3.92

3.55

3.29

4.40


Hungary

HUFFRABUBOR=

6.63

6.23

5.84

6.53


Poland

PLNFRAWIBOR=

5.73

5.40

4.93

5.85


Note: FRA quotes

are for ask prices





**************************************************************






Reporting by Boldizsár Győri in Budapest, Jason Hovet in Prague and Anna Wlodarczak-Semczuk in Warsaw; Editing by Bernadette Baum

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